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Member, Beacon International Group, Ltd.
Catastrophe-related losses helped drive the U.S. property/casualty industry’s net profit down 29.3% to $9 billion in the first quarter of this year compared with the same period last year, A.M. Best Co. Inc. said in a report released Wednesday.
The Oldwick, N.J.-based rating agency said the drop was due primarily to an underwriting loss of $3.6 billion. Best said that loss reflected an “unusually high level” of catastrophe-related losses “and to a lesser extent, diminished reserve releases.” Insurers’ statutory combined ratio deteriorated to 102.3% during the first quarter of 2011 from 99.3% during the same period of 2010.
Best noted, however, that despite underwriting losses, lower investment gains and other negative factors, insurer balance sheets remained “generally strong.” Policyholder surplus stood at a record $561.2 billion on March 31, up 4.2% from a year earlier. But insurers’ after-tax return on equity stood at 1.6% in the first quarter of the year, a drop from 2.4% for the same period a year earlier.
On the commercial insurance side, net written premiums grew 3.4% to about $44 billion in the first quarter vs. the same period last year.
No wholesale hardening
“While this certainly does not represent a wholesale hardening of rates across all commercial lines, it is nonetheless encouraging for the segment,” according the report.
The report also noted that workers compensation “seems to be gaining the most traction” in higher pricing in the commercial lines area.